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Business Studies · 2025 · 3 marks
CBSE 2025 · Region 5 · Set 3 · Q21
(a) Give the meaning of ‘financial market’, ‘capital market’ and ‘money market’.
(a)
Give the meaning of ‘financial market’, ‘capital market’
and ‘money market’.
OR
(b)
Differentiate between 'capital market' and 'money
market' on the following basis:
(i)
Investment outlay
(ii)
Expected return
(iii)
Participants
Marking-scheme solution
(i)
Financial market:
It is a market for the creation and exchange of financial assets.
(ii)
Capital Market:
It refers to facilities and institutional arrangements through
which long-term funds, both debt and equity are raised and
invested.
(iii)
Money Market:
It is a market for short term funds which deals in monetary
assets whose period of maturity is upto one year.
Difference between Capital Market and Money Market
| Basis | Capital Market | Money Market |
| Investment outlay | Investment in capital market i.e. securities does not necessarily require a huge financial outlay. The value of units of securities is generally low. | Transactions entail huge sums of money as the instruments are quite expensive. |
| Expected return | Capital market securities generally yield a higher return than money market instruments. | Money market securities yield comparatively less return. |
| Participants | The participants in Capital market are financial institutions, banks, corporates, foreign investors and retail investors. | The participants in Money market are RBI, financial institutions, banks, corporates. |
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CBSE Class 12 Business Studies past-paper question from the 2025 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.